Trade,Financial and Growth Nexus in Pakistan

Muhammad Khan and Abdul Qayyum

MPRA Paper from University Library of Munich, Germany

Abstract: This paper empirically investigates the impact of trade and financial liberalization on economic growth in Pakistan using annual observations over the period 1961-2005. The analysis is based on the bound testing approach of cointegration advanced by Pesaran et al (2001). The empirical findings suggest that both trade and financial liberalization policies play an important role in nhancing economic growth in Pakistan in the long-run. However, the short-run responses of real deposit rate and trade policy variables are very low, suggesting further acceleration of reform process. The feedback coefficient suggests a very slow rate of adjustment towards long-run equilibrium. The estimated equation remains stable over the period of study as indicated by CUSUM and CUSUMQ stability tests.

Keywords: Trade Liberalization; Financial Development; Economic Growth; Bound Test (search for similar items in EconPapers)
JEL-codes: C22 F43 G10 O10 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-cwa and nep-dev
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Citations: View citations in EconPapers (12)

Published in Economic Analysis Working Papers 14.6(2007): pp. 1-24

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Journal Article: Trade, Financial and Growth Nexus in Pakistan (2007)
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